An Estimated New Keynesian Policy Model for Australia

16 Pages Posted: 19 Mar 2008

See all articles by Daniel Buncic

Daniel Buncic

Stockholm University - Stockholm Business School

Martin Melecky

World Bank


An open economy New Keynesian policy model for Australia is estimated in this study. We investigate how important external shocks are as a source of macroeconomic fluctuations when compared to domestic ones. The results of our analysis suggest that the Australian business cycle and domestic inflation are most affected by domestic demand and supply shocks, respectively. However, domestic output also appears to be strongly affected by foreign demand shocks and domestic inflation by exchange rate shocks. Domestic variables do not seem to be significantly affected by foreign supply and monetary policy shocks.

Suggested Citation

Buncic, Daniel and Melecky, Martin, An Estimated New Keynesian Policy Model for Australia. Economic Record, Vol. 84, Issue 264, pp. 1-16, March 2008, Available at SSRN: or

Daniel Buncic (Contact Author)

Stockholm University - Stockholm Business School


Martin Melecky

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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